BIR Ruling [DA-454-03]

December 5, 2003 BIR RULING [DA-454-03] Section 105; RR 12-2003 VAT Ruling 072-2001 Commission On Higher Education DAP Bldg., San Miguel Avenue Ortigas Center, Pasig City Attention: Mr. Rolando R. Dizon Chairman Gentlemen : This refers to your letter dated August 28, 2003 requesting for a clarification as to whether or not the Commission on Higher Education (CHED) may refuse to pay the Value Added Tax on the trust fees for trust services. It is represented that trust services are rendered by the Development Bank of the Philippines (DBP) to the CHED as its Higher Education Development Fund (HEDF) Manager; that the CHED sent a letter to the DBP requesting for the deferment of collection of the 10% VAT imposed on the said trust fee of its Investment Management Account; that in a letter dated August 20, 2003, the DBP, through its First Vice President Evelyn D. Guerero, informed CHED that DBP is under obligation to continue collecting the 10% VAT pending resolution of this clarificatory request. In reply, please be informed that the 10% VAT is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. (Section 105, Tax Code of 1997) Since there is no showing that CHED is exempt from indirect tax under any existing law, its purchases of goods, properties or services from VAT registered entities are subject to the 10% VAT, which shall then be passed on to it as an indirect tax and shall form part of the invoice price thereof. cDCEHa Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group